People still talk about the Dubai Airshow in 2013 today. The Persian Gulf’s three major airlines had long since begun their rise, but on this first day of the show, all three wanted to show how serious they were. Within a few hours, Emirates (Dubai), Etihad Airways (Abu Dhabi) and Qatar Airways announced orders for several hundred long-haul aircraft, worth a sum in the high double-digit billions. Boeing was able to develop the next generation of the 777 with a clear conscience; the three from the Golf alone would probably buy enough machines. Doubts about the future of the super Airbus A380 had temporarily disappeared.
Ten years have passed since then and a lot has changed. And yet the air show of 2023, which begins this Monday, could become a similar show of force. The domestic airlines Emirates and FlyDubai will probably again spend a lot of money to expand their fleets and replace older aircraft. Emirates alone, which connects long-haul routes via its Dubai hub, is expected to order well over 100 aircraft from Airbus and Boeing. FlyDubai could follow suit with a large order for the Boeing 737 MAX. Large investments are also expected from neighboring Saudi Arabia: the new Riyadh Air, which plans to start flight operations in 2025, still needs short- and medium-haul aircraft, as do its colleagues from Saudia. In addition, there are low-cost airlines, which are also becoming more and more widespread in the Middle East.
In the early phase, the three Gulf airlines had one main goal: they wanted to attract transfer passengers who previously traveled worldwide with European, American or Asian airlines to their hubs. Qatar Airways and Etihad in particular, which emerged in the industry later than Emirates, were able to rely on very generous state aid. Competitors like Lufthansa have been criticizing this for a long time. On the other hand: In Europe too, governments have fed “their” airlines for decades, as the long-time Qatar Airways boss Akbar Al Baker has repeatedly emphasized. Well-funded, the airlines often delivered better on-board products and cheaper prices – the rest was history. No wonder that around half of all Airbus A380s ever built were stationed in Dubai, Doha and Abu Dhabi.
Turkish Airlines wants to order another 600 aircraft from Airbus and Boeing
But the three big ones are now becoming four or five. Depending on how you want to calculate, maybe even seven. The fact that Indian airlines had been weak for decades and did not represent serious competition helped enormously – millions of Indian passengers fly to the USA and other destinations via the Gulf hubs every year. But now Air India is privatized and in the hands of the Tata Group, which wants to return the company to its former glory. Air India has just ordered around 300 aircraft. The extremely successful low-cost airline IndiGo is waiting for more than 1,000 new aircraft. And no matter how often the Saudi airlines explain that they primarily want to serve their own market, their new hubs in Riyadh and Jeddah are too close to Dubai, Abu Dhabi and Doha to be ignored.
In addition, there is the increasingly strong competitor Turkish Airlines. The airline already operates around 350 aircraft and has been negotiating with Boeing and Airbus for months about further major orders for up to 600 aircraft. Industry circles say Turkish and Airbus are ready to announce a mega order in Dubai, probably for the long-haul A350 and the A321neo, which can operate on routes of up to eight hours. Negotiations were still ongoing on Sunday, but it is still unclear whether both sides will sign on Monday.
Adam Pilarski, one of the industry gurus at the US management consultancy Avitas, already advocates the theory that all the orders are creating a bubble that will burst at some point in the next few years. Pilarski argues that all of these aircraft will never be accepted. Because the new and old providers competed for the same passengers and they could only book one airline for a specific trip.
Andy Cronin, head of one of the largest aircraft leasing companies at Avolon, is less pessimistic. He believes there will be enough passengers to fill all the new planes; Saudi Arabia has a huge local market that has not yet been well developed.
In many cases, growth also depends on infrastructure. But something is happening there too: new airports are planned in Saudi Arabia, including a large new airport in Riyadh. Dubai is plagued by bottlenecks, but has already built a second airport. A huge new terminal has just opened in Abu Dhabi. And Turkish Airlines has more than enough space for expansion at the new Istanbul airport. All of these are conditions that competitors in Western Europe can only dream of.